Sterling and FTSE help Rathbone Brothers finish strong

Rathbone Brothers posted its preliminary results for the 2016 calendar year on Thursday, with total funds under management sitting at £34.2bn at 31 December, up 17.1% year-on-year.

The FTSE 250 firm pointed out that the FTSE 100 Index increased by 14.4%, and the FTSE WMA Balanced Index increased by 13.6% over the same period.

It said the total net annual growth rate of funds under management in the investment management business was 4.5%, down from 5.7% in 2015.

That comprised £0.8bn of net organic growth, up from £0.7bn, and £0.4bn of acquired inflows, down from £0.7bn.

The underlying rate of net organic growth was 2.9% in 2016, marginally off the 3.0% achieved in 2015.

Rathbone’s unit trusts saw gross sales of £1.3bn in 2016, improving from £0.9bn, while funds under management increased by 29.0% to £4.0bn.

Underlying operating income in investment management was £226.3m for the year, rising from £209m, an increase of 8.3%.

The average FTSE 100 Index was 6659 on Rathbone’s quarterly billing dates, up from 6415 during 2015.

Total underlying operating expenses increased 11.1% to £176.4m, the board said, largely reflecting continued investment in strategic initiatives as well as underlying growth in the business.

Underlying profit before tax - excluding acquisition-related costs, head office relocation costs and charges in relation to client relationships and goodwill - increased 6.4% to £74.9m during the year, while underlying earnings per share improved 4.4% to 122.1p.

Reflecting those acquisition-related costs, head office relocation costs and charges in relation to client relationships and goodwill, profit before tax was £50.1m for the year, a decrease of 14.5%, while basic earnings per share decreased 19.0% to 78.9p.

Rathbone’s board recommended a final dividend of 36p for 2016, up from 34p in 2015, making a total of 57p for the year, an increase of 3.6% on 2015.

“After a nervous start to 2016, the FTSE 100 performed increasingly strongly as the year progressed, largely reflecting the impact of a sharp fall in sterling after the EU referendum vote,” said chairman Mark Nicholls.

“Nevertheless, the recovery in the second half had a favourable impact on our financial performance, helping our total funds under management to grow by 17.1% to £34.2bn.

“In spite of continuing political and economic uncertainties, we will pursue our planned strategic growth initiatives and continue to take advantage of growth opportunities in the sector.”